Primo Chemicals takes full control of Flow Tech for ₹55 cr
The ₹1,418/share price is ~8% below independent fair value of ₹1,545. Flow Tech, a chlorine consumer, adds ₹341 cr revenue to Primo's consolidated books.
What's new
- Board approves acquisition of remaining 51% in Flow Tech Chemicals for ₹55 cr.
- Transaction at ₹1,418/share, 8% below independent fair value of ₹1,545.
- Target contributed ₹341.66 cr turnover, ₹9.80 cr net profit in FY26.
Why this matters
The deal tightens Primo's control over a key chlorine off-taker. At a valuation below fair value, the pricing is favourable. For a micro-cap with ₹591 cr market cap, deploying 9.5% of that into a profitable associate captures the profit from chlorine consumption.
What we're watching
- Shareholder approval via postal ballot – e-voting runs 7 July to 5 August.
- Flow Tech's margin trajectory post-integration given chlorinated paraffin market dynamics.
- Potential impact on Primo's consolidated debt post cash outflow of ₹55 cr.
The full read
Primo Chemicals is buying the remaining 51% of Flow Tech Chemicals for ₹55 crore in cash at ₹1,418.20 a share, an 8% discount to the ₹1,545.40 fair value set by BDO Valuation. The deal turns Flow Tech into a wholly owned subsidiary. That matters because Flow Tech is a consumer of Primo's chlorine, giving Primo tighter control over this off-taker. In FY26, Flow Tech generated ₹341.66 crore turnover and ₹9.80 crore net profit. Those figures will now flow fully onto Primo's consolidated books. For a company with a ₹591 crore market cap, the ₹55 crore outlay is material at 9.5% of market size. The board has also called a postal ballot, with e-voting from 7 July to 5 August, to secure shareholder approval. Two independent director appointments and MD/ED remuneration will also be voted on. The acquisition price being below the independent valuation gives management room to argue discipline, but the cash outflow and integration risks are yet to be tested.
Questions answered
- What is the acquisition price and how does it compare to valuation?
- ₹55 cr for 51% at ₹1,418.20/share, below BDO's fair value of ₹1,545.40.
- Why does Primo want full ownership?
- Flow Tech is a key consumer of Primo's chlorine; full control enhances vertical integration and captures profit from that consumption.
- How material is this deal?
- ₹55 cr is ~9.5% of Primo's ₹591 cr market cap and ~16% of Flow Tech's turnover (₹341 cr).
- What does Flow Tech produce?
- Chlorinated paraffin and hydrochloric acid, using chlorine from Primo.
- What approvals are needed?
- Shareholder nod via postal ballot; e-voting from 7 July to 5 Aug; two independent directors and MD/ED remuneration also to be approved.
- What was Flow Tech's recent financial performance?
- FY26 turnover of ₹341.66 cr and net profit of ₹9.80 cr.